What encompasses costs incurred in the process of earning revenue?

The concept of costs incurred in the process of earning revenue is best captured by the term "Expense." Expenses are defined as the costs that a business incurs during its normal operations to generate revenue. This includes costs like salaries, rent, utilities, and materials used in production. Recognizing expenses is essential for determining a company's profitability and understanding its financial performance over a specific period.

When a company generates revenue, it simultaneously incurs expenses associated with the production and delivery of its goods or services. These expenses are recorded in the financial statements and are deducted from revenue to calculate net income, highlighting their critical role in financial analysis.

The other potential choices, such as investment, revenue, and capital costs, pertain to different aspects of financial terminology. Investments relate to the allocation of resources to generate returns in the future, revenue reflects the income generated from sales, and capital costs involve expenditure on long-term assets that might require different considerations in financial planning. The focus on "Expense" directly aligns with the operational costs needed to achieve revenue generation, making it the correct choice in this context.